Charges Against North Dismissed : Iran-Contra: Judge drops case at request of independent counsel. Testimony by McFarlane is cited as roadblock to reinstating ex-Marine’s convictions.

A federal judge on Monday dropped all criminal charges against Oliver L. North, the central figure in the Iran-Contra scandal, ending a saga that the former White House aide characterized as “five years of fire.”

U.S. District Judge Gerhard A. Gesell dismissed the case at the request of independent counsel Lawrence E. Walsh, who said that testimony provided last week by North’s former boss, Robert C. McFarlane, made it unlikely that North’s previous convictions could be reinstated.

North, a retired Marine lieutenant colonel, was accused of setting up a network to finance the Nicaraguan rebels after Congress had outlawed such assistance and of diverting funds from the secret sales of arms to Iran to help pay for the assistance.

He was convicted in May, 1989, on three charges arising from his role in the scandal. But an appeals court later ordered Gesell to hold a special hearing to determine whether any of the witnesses at his trial had been influenced by North’s congressional testimony, which he had been assured would not be used against him in court.

North, who four months ago denounced Walsh as “an imperial prosecutor” and “a vindictive wretch” for pursuing the case against him, appeared relieved but subdued Monday as he declared himself “totally vindicated.”

Walsh, however, was more circumspect. “These things speak for themselves,” he said. “I don’t think prosecutors should comment beyond that.”

Although some Republican congressmen from Orange County and elsewhere immediately called for Walsh to shut down his 4 1/2-year investigation of Iran-Contra, the independent counsel made clear he has no such intention. He said the recently rejuvenated inquiry is operating under “very heavy pressure” imposed by a five-year statute of limitations, and indicated that additional prosecutions are likely.

The dismissal came in a three-minute court session as Gesell declared: “This terminates the case.” North, markedly grayer than when he defiantly testified during six days of televised congressional hearings four years ago, hugged Brendan V. Sullivan Jr., his chief defense counsel, his beaming wife, Betsy, two daughters and friends who surrounded him.

In July, 1990, the U.S. Circuit Court of Appeals threw out North’s conviction on one count of destroying documents. The appeals panel set aside his convictions on the remaining two counts of aiding in the obstruction of Congress and accepting an illegal gratuity--a $14,000 security fence for his home.

The appellate court, splitting 2 to 1 with the panel’s two Ronald Reagan appointees voting to overturn, held that the prosecutors had to prove in court that North’s televised testimony had not influenced that of other trial witnesses.

McFarlane, the first witness at the hearing called by Gesell to carry out the appellate court’s order, jolted prosecutors by asserting that North’s “riveting” congressional testimony had colored the version of events that he provided at the trial.

Asked about Monday’s ruling, President Bush told reporters he was “very pleased to see the Ollie North decision. He’s been through enough.”

“That’s the system of justice working,” Bush said, adding that “on a personal basis and for his family who’ve been through a lot, I’m very, very pleased.”

North now may be called as a witness at Senate Intelligence Committee hearings on the nomination of Robert M. Gates to become CIA director. North’s notes immediately after the 1986 disclosure that the United States had traded arms for hostages with Iran contain the cryptic reference: “Script for Gates to use” with the chairmen and vice chairmen of the House and Senate Intelligence committees, which were to be briefed on the CIA’s knowledge of the deal.

Gates was the No. 2 official at the CIA when the scandal unfolded; his knowledge of the details of it has become an issue in his confirmation hearings.

Sen. John W. Warner (R-Va.), a member of the Intelligence Committee, said as the Gates hearings began Monday that the dismissal of charges invited the committee to seek North’s testimony. Sen. David L. Boren (D-Okla.), the committee chairman, said he would pursue the idea.

Gesell sentenced North in July, 1989, to 1,200 hours of community service, $150,000 in fines and two years of probation. North performed the community service by working in an anti-drug program in a narcotics-infested area of Washington, but the fine was not paid pending resolution of North’s appeal.

“Congratulations, colonel,” a U.S. marshal said as North entered Gesell’s high-ceilinged courtroom Monday morning. “Thanks,” North responded, patting the marshal on the shoulder. “It’s a great day,” he added as he followed his wife and daughters inside.

During the hearing North sat motionless and ramrod straight on the edge of his chair, his head slightly cocked as if straining to hear every word.

After the hearing, North said the dismissal restored his status as “a lieutenant colonel, United States Marine Corps, retired,” presumably including his pension.

Although the independent counsel provisions of the Ethics in Government Act appear to bar the government from reimbursing legal fees once an indictment occurs, North said in an interview that he had been discussing attempts to recover the fees. “Our expenses have been extraordinary,” he said. When asked to disclose the actual amount, he laughed and said “billions.”

A substantial portion of the fees, however, are believed to have been covered through fund-raising efforts by North’s supporters.

Walsh declined comment on whether the dismissal would have any effect on the appeal of former White House National Security Adviser John M. Poindexter of his Iran-Contra convictions on five felony counts. Poindexter, who was sentenced to six months in prison, raised the issue of immunized testimony tainting his trial when the case was argued seven months ago.

Walsh, noting that he had urged Congress not to grant immunity to North or other potential criminal defendants, said the dropping of the case against North “is a very serious warning that immunity is not to be granted lightly.”

Congress has “the very broad political responsibility for making a judgment as to whether it’s more important that the country hear the facts quickly or that they await a prosecution,” said Walsh, a former federal judge.

Monday’s decision won strong praise from three Republican congressmen from Orange County who have voiced continued support for North.

Rep. Dana Rohrabacher (R-Long Beach), who represents northwestern Orange County and won election to Congress in 1988 after campaign fund-raising appearances by North, said: “Oliver North is a hero. Lawrence Walsh is a zero. . . .

“This was never a criminal prosecution; it was a political persecution,” Rohrabacher said. “Lawrence Walsh has been strutting around town like a bantam rooster, like an egotistic patrician with the power to destroy the lives of anyone he damn well chooses. He thinks he is the ringmaster. It’s time we get this clown out of town.”

Rep. Ron Packard (R-Carlsbad) said the verdict was of little surprise and criticized Walsh for carrying on with a case that appeared politically motivated.

“I just feel terribly bad the government spent so much money trying a case many of us felt was ridiculous,” Packard said. “Many of us felt Oliver North was a good American working in a situation that ultimately became very political.”

And Rep. Robert K. Dornan (R-Garden Grove), one of North’s most vocal supporters in Congress, said he felt the dismissal of charges was “inevitable” because of the legal obstacles facing Walsh if he had decided to retry North.

“It is a good feeling for me to see a friend able to start rebuilding his life,” Dornan said. “Having said all that, Ollie knows that he made many mistakes. . . . What Ollie did wrong, clear-cut, was the shredding and fooling around with documents--that’s when he was pushed to the wall because he thought lives were at stake, and he paid the price for that. Ollie wouldn’t relive that.”

Times staff writer Eric Lichtblau in Orange County contributed to this story.